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A business operating plant has a challenge with corrosion damage. They are considering replacing the affected equipment at a cost of $ 5 M .
A business operating plant has a challenge with corrosion damage. They are considering
replacing the affected equipment at a cost of $The new equipment is a better design and
will not corrode The damage rate has been $ per year but it could double or quadruple
each year. As their consultant, you are asked to model the multistage decisions for the next
years.
You study the corrosion rates seen throughout the industry and conclude the most likely
corrosion rate probabilities in any one year are: steady is double is and quadruple is
You find that once the corrosion rate goes up in any year, that's the new base level
meaning that subsequent steady, double, or quadruple rates are from that value.
a Create an event tree model to analyze this multistage decision.
Please draw out the tree
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